On Oct. 1, 1999, Pres. Jiang Zemin and leaders of the Communist Party of China (CPC) celebrated the 50th anniversary of communist rule in China with a massive military parade through downtown Beijing. When Mao Zedong had proclaimed the establishment of the People’s Republic of China (PRC) half a century earlier, China was just emerging from a long and bloody civil war. Few observers suspected that it was entering upon an even bloodier era of revolutionary violence, political repression, arbitrary power, and famine. By the time Mao died in 1976, communist rule in China had claimed more than 50 million lives. Deng Xiaoping, who ruled China between 1977 and the late 1990s, rescued the CPC by repudiating Maoism and initiating a period of rapid economic growth, social transformation, and relative political stability. Jiang, a lesser figure than Mao or Deng, saw himself as third in the line of communist dynasts. By 1999 the country over which he presided was vastly more wealthy and powerful than the China of 50 years before, but it still faced a daunting set of problems. (SeeSpecial Report.)

Politics and the Economy

China’s basic recipe for political stability over the past decade had been two measures of economic progress mixed with one measure of liberalization and several large pinches of repression. The exact proportions varied from year to year, but the recipe worked. It was put to the test again on April 25, 1999, when CPC leaders were presented with what they perceived as a unique challenge to their authority. More than 10,000 members of the Falun Gong spiritual movement, which blended elements of Buddhism and Taoism with meditation and exercise, gathered at the walled compound housing the offices and homes of top CPC leaders in a silent, peaceful protest against the government’s refusal to accord them official recognition. Under the charismatic leadership of its founder, Li Hongzhi (seeBiographies), who had lived in New York City since 1992, Falun Gong, a loosely knit organization, had developed rapidly since its beginnings in 1992 and claimed a worldwide membership of 100 million persons in more than 30 countries, including the U.S. Estimates of the number of its Chinese followers ranged from 2 million to 20 million. The spiritual vacuum in China created by the collapse of revolutionary idealism and nourished by social change had created fertile soil for the renascence of traditional indigenous and foreign religions as well as new ones. Perhaps mindful of the role that “heretical sects” and secret societies played in antidynastic rebellions during the imperial age, the CPC banned Falun Gong on July 22 and initiated a massive crackdown against it. Hundreds of leaders were arrested and thousands of followers sent to reeducation camps. Falun Gong members in the CPC and the army were forced to engage in self-criticism and to repudiate their beliefs. The government accused Falun Gong of “advocating superstition, spreading fallacies and hoodwinking people” and also of “inciting and creating disturbances, and jeopardizing social stability.” Its real crime was that it was a popular organization outside the orbit of CPC control in a political system intolerant of dissent. CPC leaders dismissed Li Hongzhi’s assertion that Falun Gong was apolitical, ignored his call for a reversal of the ban, and rejected international criticism of their blatant violation of the right to freedom of belief and assembly. The party’s anachronistic attempt to kindle a Maoist-style campaign against Falun Gong during an era of political disillusionment failed to make much headway. Its parallel efforts to revive its own moribund ideology through a campaign of promoting the study of Marxism-Leninism-Maoism seemed equally doomed. Another instance of the government’s campaign against religious sects occurred in October when Liu Jiaguo, the founder of the Master of God cult, which numbered some 10,000 persons, was executed on charges of having raped several female believers and engaged in fraud. This was a case of killing the chicken to scare the monkey, as the Chinese proverb goes—i.e., punishing one to warn others.

The CPC’s authoritarian reflex and political paranoia had already been manifested in the arrest, trial, and imprisonment of leaders of the fledgling China Democracy Party, beginning in December 1998 and continuing well into 1999. The run-up to the 10th anniversary of the June 4, 1989, Tiananmen Square massacre revived memories of the student-led pro-democracy movement that preceded it. The authorities preempted any commemoration of the massacre by closing Tiananmen Square for renovation, and the anniversary passed quietly inside China. In Hong Kong, a special administrative region of China since 1997, a crowd of 70,000 gathered to mark the anniversary. From his place of exile in the U.S., Wang Dan, a student leader of the 1989 democracy movement, mounted an international petition campaign to pressure Beijing into “reversing the verdict” on June 4. Inside China, Bao Tong, a former top aide to Zhao Ziyang, issued a similar call that was likewise ignored by CPC leaders.

The political situation inside China was marked by stability. There were no major shake-ups and only one high-level purge among China’s governing elite in 1999. The triumvirate of President Jiang, National People’s Congress Chairman Li Peng, and Premier Zhu Rongji remained in control. The 50th anniversary of the PRC became the occasion for the apotheosis of Jiang, who completed his 10th year at the helm of the party and the state. The celebration of the virtues and accomplishments of this Chinese everyman—a kind of Chinese version of Harry Truman—reached its apogee on October 1 when Jiang’s giant portrait joined those of Mao Zedong and Deng Xiaoping in the National Day parade. Waiting in the wings for Jiang’s scheduled retirement in 2002 as CPC general secretary was the man Jiang had apparently tapped as his successor, Hu Jintao, a 56-year-old member of the Standing Committee of the Political Bureau who ranked fifth in China’s power hierarchy. After graduating with a degree in engineering from Qinghua University, Beijing, in 1965, Hu had followed the career trajectory of a typical successful party apparatchik. He had served as provincial party secretary in Guizhou and then Tibet in the late 1980s during a period of heightened Chinese repression of Tibetan nationalists. He became a member of the CPC Central Committee in 1982 and of the Political Bureau Standing Committee 10 years later. At the Fourth Plenum of the 15th Central Committee (Sept. 19–22, 1999), Hu was appointed vice-chairman of the party’s Central Military Commission, a key post in the edifice of power. Meanwhile, Xu Yunhong, municipal party secretary of Ningbo, was deprived of his alternate membership on the Central Committee and expelled from the Communist Party after being charged with having embezzled state funds and with corruption. At every level in the party and state apparatus, corruption remained a major problem that had hardly been affected by periodic campaigns to combat it. At the Fourth Plenum, the party reaffirmed its commitment to the difficult long-term problem of restructuring state-owned enterprises (SOEs), calling it the central task in the ongoing reform of the national economy. The core objective of this restructuring, scheduled to be completed in 2010, was to make SOEs less of a burden on the state budget by increasing their responsiveness to the market, reducing subsidies, and enhancing their competitiveness by upgrading management and technology.

Weak domestic demand continued to be a problem, and mild deflation persisted for a third straight year. As in previous years, the government resorted to massive state investment in infrastructural projects to stimulate the economy. Even the educational sector played a role as universities, which charged substantial tuition and fees, expanded their enrollments. Toward the end of the year, an annual growth rate of 7.6% was claimed, but not a few observers questioned the accuracy of China’s official statistics, which, they claimed, probably overstated the growth rate by several percentage points. For a third straight year, China suffered mild deflation as the consumer price index fell by 1.3%. China’s hard currency reserves topped $154 billion, compared with $145 billion in 1998. Meanwhile, a leading Chinese scholar in the West estimated that as much as 4% of China’s gross domestic product may have been wasted through corruption that had been endemic throughout the country for most of the past 20 years. Foreign direct investment in China was estimated at $30 billion–38 billion, and foreign trade with China’s top trading partners was $255 billion through the third quarter with exports up 2% and imports up 1% over 1998. China’s trade surplus with the U.S. increased to a projected $30 billion, but despite serious problems in the Sino-American relationship (see below), the U.S. Congress extended China’s normal trading status for another year. On November 15 China and the U.S. culminated 13 years of hard bargaining with a landmark trade deal that opened the door to China’s membership in the World Trade Organization, which was likely to occur in 2000. The agreement would almost certainly have a profound impact on China’s domestic economy, stimulating reform while causing considerable hardships as inefficient producers experienced the impact of international competition. On the eve of China’s 50th anniversary celebrations, Fortune magazine served as host to a Shanghai forum called “China: The Next 50 Years,” at which 300 executives from the world’s largest multinational corporations sought to curry Jiang’s favour.

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